Dear Santa: Please Bring Cash

Why spend $75 a head on so-so gifts? Give a gift with some cache this year.

So explain to me exactly why people would bother setting their alarm clocks so they can be in the Wal-Mart parking lot at 5 a.m. the morning after Thanksgiving, when the perfect holiday gift can be had at the drive-through ATM on your way home from work Wednesday night.

Maybe opening an envelope to ogle a check from Grandma doesn't exactly scream "Kodak moment." But it's a much prettier picture than the one of you glaring at the Visa bill that bears your holiday spending tab.

According to the National Retail Federation, the average American will spend nearly $800 on gifts over the holiday season. Elsewhere, I've read that the amount is closer to $1,125 on a gift list 15 people long. (For those keeping score, that's $75 per person.)

Ask yourself: By the time that credit card bill rolls around, are your giftees still wearing, ingesting, playing, or soaping up with that $75 item you lovingly selected and flung in your shopping cart so you could get home before the next episode of Lost started?

Cash cacheI'm not suggesting that anyone abandon all tangible elements of gift-giving. If your heart is set on shopping, check out the November issue of GreenLight (our gift to you is a free 30-day trial), where we compiled a list of 25 lesser-known websites offering bargains and coupon/rebate codes on the gamut of giftworthy stuff like computers, tech gadgets, wine, fashion, and fine dining.

But remember, the holidays are supposed to be different -- filled with little luxuries we can't justify buying for ourselves and others when we're picking up dryer sheets, new socks, and organic turkey bacon. It's supposed to be a meaningful and resplendent time, with lasting memories.

Let's be honest, though: For us last-minute shoppers, it's mostly about finding something that's pretty easy to wrap. And what's easier than licking an envelope?

True, cash (and cash equivalents) may not have a lot of "under-tree appeal," but when the sugar-cookie high wears off, a thoughtful financial present will bring smiles for many holidays to come. (So as not to completely dispense with the seasonal glee, go ahead and get that giant stuffed panda to hold the card.)

If forking over a few crisp $20s may seem a tad gauche, read on for a few ideas to dress up that gift of green and make it multiply.

Your dollars at workThe amount the average shopper will spend this year, using the National Retail Federation's stats, is the equivalent of one-fifth of a fully funded IRA for 2006. Yup, that $800 represents a pretty significant chunk of long-term savings. Yet so many of us mindlessly blow it at the mall.

Last year, I deigned to suggest that cash-strapped households consider canceling Christmas. (Evidently, such lunacy won't fly in many readers' households.) But take a moment and consider what the average shopper's budget might cover if there weren't pressure to blow it at Target and TJ Maxx:

Put that $800 in an ING 12-month "Orange CD," and earning its current 5.1% APY, your giftee would have an extra $41 by next year's post-Christmas sales.

What would that amount be worth to your little nephew if you plunked it down in an ETF or mutual fund that tracked the S&P 500 -- say, SPDRS(AMEX:SPY) or the Vanguard S&P 500Index Fund(FUND:VFINX), respectively? If the index delivered a respectable return of 7% or so, he'd have $856 in his brokerage account in one year -- the initial $800 plus a return of $56. After 10 years, he'd have $1,574, and you'd be well on your way to becoming the all-time, hands-down favorite relative.

While your nephew was clearly excited about the prospects of owning a chunk of the stock market, how about regaling his sister with shares in one of the companies that helped compose her wish list? You can buy shares for little Buffy (here's how) in companies like Mattel(NYSE:MAT) or even a few shares in game console maker Sony(NYSE:SNE), just to make her bro spittin' jealous.

Even if you can't afford to buy more than one share of stock, or if the investments you pick don't do so hot, consider that it's not just the thought that counts -- it's the message that you send. (And, really, do people still blame you for buying them a Betamax instead of VHS back in the day?)

There's nothing more touching than knowing someone has high hopes for your future and the wherewithal to present a gift designed to pay continual dividends throughout time. Plus, cash or cash equivalents save you the embarrassment of fumbling for a gift receipt when your last-minute panic gift falls flat.

Dayana Yochim is the advisor forMotley Fool GreenLight, which offers simple, straightforward money-saving, money-making tips you can put into practice without breaking a sweat. Each issue has a $450 "money in the bank" promise -- that's the amount you can make or save following our tips. Dayana doesn't own any of the shares mentioned in this story. The Fool has a disclosure policy.